No duty on pilfered goods [Section 13] :
If any imported goods are pilfered after the unloading thereof and before the proper officer has made an order for clearance for home consumption or deposit in a warehouse, the importer shall not be liable to pay the duty leviable on such goods. However, where such goods are restored to the importer after pilferage, the importer becomes liable to duty.
Analysis of section 13
The logic behind this section is that when the goods are not under the control of the importer, he should not be required to pay duty on such goods.
(a) Conditions to be satisfied for exemption from duty
a. The imported goods should have been pilfered.
b. The pilferage should have occurred after the goods are unloaded, but before the proper officer makes the order of clearance for home consumption or for deposit into warehouse.
c. The pilfered goods should not have been restored back to the importer.
| The term „pilfer‟ means “to steal, especially in small quantities; petty theft”. Therefore, the term does not include loss of total package. |
(b) Circumstances in which pilferage can be claimed
In order to claim pilferage the following circumstances should exist:
a. there should be evidence of tampering with the packages;
b. there should be blank space for the missing articles in the package; and
c. the missing articles should be unit articles [and not part articles]
(c) Pilferage noticed at the time of removal of goods by the importer
The pilferage of goods would normally be noticed at the time of physical verification of goods by the customs authorities. However, in some circumstances, it may so happen that the pilferage may be observed only at the time of removal of goods by the importer. In such case, the order for clearance, or as the case may be, for bonding would already have been passed. Therefore, the importer has to ask for survey either by the steamer agents or by the insurance surveyors and the report issued by them would form the basis for claiming remission. As in such the circumstances, the duty would already have been paid, the remission is allowed in the form of a refund.
(d) Following points merit consideration
1. If goods are pilfered after the order of clearance is made but before the goods are actually cleared, duty is leviable.
2. Section 13 deals with only pilferage. It does not deal with loss/destruction of goods.
3. Provisions of section 13 would not apply if it can be shown that pilferage took place prior to the unloading of goods.
4. In case of pilferage, only section 13 applies and claim of refund under section 23(1) is not permissible [Bharat Earth Movers Ltd. v. CC 2001 (129) E.L.T. 580 (Mad.)].
5. Section 13 applies to the goods which are under the custody of the custodian under section 45. The goods, even though held by the custodian appointed by the Collector, are held by him for the purposes of customs formalities. Any pilferage noticed during the period is on the account of the Customs formalities. Section 13 and section 45 are independent provisions. In other words, whether duty is paid/ payable by the custodian or not, remission cannot be denied to the importer by the Department.